CONFIDENTIAL
1
Centre for Tax Policy and Administration
Tax guidance series
General Administrative Principles - GA
P002 Taxpayers’ Rights and Obligations
Taxpayers’ Rights and Obligations – Practice Note
Prepared by the OECD Committee of Fisc
al Affairs Forum on
Tax Administration
Caveat
Each revenue authority faces a varied environment within which they administer their taxation system.
Jurisdictions differ in respect of their policy and legislative environment and their administrative practices
and culture. As such, a standard approach to tax administration may be neither practical nor desirable in a
particular instance.
The documents forming the OECD Tax guidance series
need to be interpreted with this in mind. Care
should always be taken when considering a country’s practices to fully appreciate the complex factors that
have shaped a particular approach.
CONFIDENTIAL
2
Table of Contents
INTRODUC
TION ...................................................................................................................
....................... 3
THE BASIC
RIGHTS ...............................................................................................................
..................... 4
THE BASIC OB
LIGATIO
NS ..........................................................................................................
.............. 5
TAXPAYERS’
CHARTE
R .............................................................................................................
............... 6
GUIDANCE .......................................................................................................................
............................ 7
EXAMPLE TAXPAYE
RS' CHAR
TER.....................................................................................................
.... 8
HISTORY ........................................................................................................................
............................. 12
COMPATIBILITY ..................................................................................................................
..................... 12
CONTAC
T ........................................................................................................................
........................... 13
CONFIDENTIAL
3
INTRODUCTION
1. In any democratic society taxpayers citizens will have a number of basic rights as well as obligations in
relation to their Government and its agencies. Revenue authorities are no exception and most countries
have legislation governing taxpayer’s rights and obligations in relation to taxation.
2. As would be expected, given the diversity of environments faced by revenue authorities around the
world, the specific details of the rights and obligations vary somewhat by country. There are however a
number of common threads that can be identified. In 1990 the OECD’s Committee of Fiscal Affairs
Working Party Number 8 published a document entitled “
Taxpayers’ rights and obligations – A survey of
the legal situation in OECD countries
1
”
3. The survey found that, while most countries at that time did not have an explicit Taxpayers’ charter,
the following basic taxpayer rights were present in all systems:
•
The right to be informed, assisted and heard
•
The right of appeal
•
The right to pay no more than the correct amount of tax
•
The right to certainty
•
The right to privacy
•
The right to confidentiality and secrecy
4. These basic taxpayer rights also imply basic obligations. There is a set of behavioural norms expected
of taxpayers by Governments. These expected behaviours are so fundamental to the successful operation of
taxation systems that they are legal requirements in many, if not most, countries. Without this balance of
taxpayers’ rights
and
obligations taxation systems could not function effectively and efficiently. These
taxpayer obligations are:
•
The obligation to be honest
•
The obligation to be co-operative
•
The obligation to provide accurate information and documents on time
•
The obligation to keep records
•
The obligation to pay taxes on time
5. Many countries have elaborated these basic rights and obligations into a taxpayers’ charter. These
documents often include statements about behaviours expected from officials and taxpayers. Some
countries have chosen to consolidate the measures taken to protect taxpayers into a “taxpayers’ charter” or
“declaration”. In some countries they have taken form of a general statement of the broad principles which
1
Approved by OECD Council on 27 April 1990. Based on country replies to a questionnaire sent out in 1988.
CONFIDENTIAL
4
should govern the relationship between the tax authorities and the taxpayer. In other countries, these
documents provide a more detailed guide to the rights of taxpayers at each stage in the assessment process.
Yet other countries have taken the approach of including statements about behaviours expected from
officials and taxpayers in documents such as mission statements for the tax administration. Accordingly, it
should be stressed that even countries without a taxpayer charter may, nevertheless, attach equal
importance to taxpayers’ rights and that in practice taxpayers in such countries have rights similar to those
found in formal taxpayers’ charter statements.
THE BASIC RIGHTS
6. The 1990 survey noted the following rights:
a)
The right to be informed, assisted and heard
(Paragraph 2.16
2
)
7. Taxpayers are entitled to have up-to-date information on the operation of the tax system and the way in
which their tax is assessed. They are also entitled to
be informed of their rights, including their rights of
appeal. All taxpayers can expect that the information
provided to them should reflect the complexity of the
tax situation, thereby enabling them to understand better their tax affairs. The authorities may use a variety
of means to fulfil this obligation: information pamphlets, taxpayers’ charters, the telephone oral statements,
video guides,
etc
.
b)
The right of appeal
(Paragraph 2.17)
8. The right of appeal against any decision of the tax authorities applies to all taxpayers, and to almost all
decisions made by the tax authorities, whether as regards the application of the law or of administrative
rulings, provided the taxpayer is directly concerned.
c)
The right to pay no more than the correct amount of tax
(Paragraph 2.20)
9. Taxpayers should pay no more tax than is required by the tax legislation, taking into account their
personal circumstances and income. Thus whilst it is acceptable to reduce tax liability by legitimate tax
planning, governments make a distinction between this form of tax planning and forms of tax minimisation
which clearly go against the intent of the legislator. Taxpayers are also entitled to a reasonable measure of
assistance from the tax authorities so that they receive all the reliefs and deductions to which they are
entitled.
d)
The right to certainty
(Paragraph 2.21)
10. Taxpayers also have a right to a high degree of certainty as to the tax consequences of their actions. Of
course, certainty is not always possible. For exam
ple, taxpayers may not always know in advance the
effect of rules that are dependent on the facts and circumstances in a particular case. Also, tax authorities
may not be obligated to provide the taxpayer with certainty in relation to the application of anti-abuse
provisions aimed at taxpayers seeking to circumvent the
intent of the legislation. However, it is clearly a
goal that taxpayers should be able to anticipate the consequences of their ordinary personal and business
affairs. Achieving this goal is often difficult because modern tax systems are complex and evolving.
2
References to the 1990 document.
CONFIDENTIAL
5
e)
The right to privacy
(Paragraph 2.25)
11. All taxpayers have the right to expect that the tax authorities will not intrude unnecessarily upon their
privacy. In practice, this is interpreted as avoiding unreasonable searches of their homes and requests for
information which is not relevant for determining the correct amount of tax due. In all countries very strict
rules apply to the entry into a person’s dwelling or business premises by a tax official in the course of a tax
investigation and on obtaining information from third pa
rties. In some countries visits to a taxpayer
require the consent of the taxpayer; in the majority of countries a signed warrant is generally required to
enter the home of a taxpayer who objects to a visit by the tax authority. Similarly, strict rules apply to
obtaining information from third parties on the affairs of a taxpayer.
f)
The right to confidentiality and secrecy
(Paragraph 2.26)
12. Another basic taxpayers’ right is that the informati
on available to the tax authorities on the affairs of a
taxpayer is confidential and will only be used for the purposes specified in tax legislation. Tax legislation
usually imposes very heavy penalties on tax officials who misuse confidential information and the
confidentiality rules that apply to tax authorities are
far stricter than those applying to other government
departments.
THE BASIC OBLIGATIONS
a)
The obligation to be honest
13. If most taxpayers did not pay most of their taxes most of the time, a tax system would be placed under
a severe compliance strain and governments would be unable to finance the expenditures voted for by their
citizens. Taxpayer honesty is therefore fundamental to the operation of any tax system and all systems have
investigatory powers with penalties and sanctions in place to cater for instances where a taxpayer is does
not comply. Accordingly taxpayers should always exercise reasonable care and diligence in attempting to
honestly comply with their tax obligations.
14. The exercise of penalties and sanctions by a revenue authority should take into account any evidence as
to the reasons for non-compliance. Errors can arise
due from honest mistakes - particularly with complex
tax requirements, from ignorance about tax obligations or, in some instances, from the taxpayer being
prevented from complying by some event outside their control, such as a natural disaster.
15. Factors influencing levels of taxpayer honesty should be taken into account in the design and
administration of a tax system. Perceptions about the fairness and equity of a tax system and a taxpayer’s
prior treatment by officials from the revenue authority can influence their future honesty.
b)
The obligation to be co-operative
16. Modern tax systems can only function effectively if there is a high degree of voluntary compliance,
keeping the need for enforcement activity to a minimum. Co-operative behaviour on the part of most
taxpayers allows the Government to run the taxation system at a relatively low cost and minimises
unnecessary intrusion into taxpayer affairs and those of third parties. Hence taxpayers are encouraged to
co-operate with relevant revenue authorities in
attempting to comply with their tax obligations.
CONFIDENTIAL
9
Your right of appeal
We will, in normal circumstances, strive to:
•
fully explain your rights of review, objection
and appeal if you are unsure of them or need
clarification;
•
review your case if you believe that we have misinterpreted the facts, applied the law incorrectly or
not handled your affairs properly;
•
ensure that the review is completed in a compre
hensive, professional and impartial manner by a
representative who has not been involved in the original decision;
•
determine your objection [within ... days]/[
as quickly as possible]
6
unless we require more
information to do so, or the issues are unusually complex;
•
give you reasons if your objection has been completely or partially disallowed;
•
request further information from you only where it is necessary to resolve the issues in dispute.
Your right to pay no more than the correct amount of tax
We will:
•
act with integrity and impartiality in all our dealings with you, so that you pay only the tax legally due
and that all credits, benefits, refunds and other entitlements are properly applied.
Your right to certainty
We will, in normal circumstances, strive to:
•
provide you with advice about the tax implications of your actions;
•
let you know [at least ... days] /[as soon as possible]
7
before the conduct of an interview or a request
for the production of documents;
•
advise you of the scope of an interview and our requirements;
•
arrange a suitable time and place for the interview and allow you time to prepare your records.
Your right to privacy
We will:
•
only make enquiries about you when required to check that you have complied with your tax
obligations;
•
only seek access to information relevant to our enquiries;
•
treat any information obtained, received or held by us as private.
Your right to confidentiality and secrecy
We will:
•
not use or divulge any personal or financial information about you unless you have authorized us in
writing to do so or in situations where permitted by law;
6
See footnote 3
7
See footnote 3
CONFIDENTIAL
10
•
only permit those employees within the administration who are authorized by law and require your
personal or financial information to administer our programs and legislation, to access your
information.
And your obligations
Your obligation to be honest
We expect you to:
•
provide complete and accurate information as and when required;
•
declare all your assessable income in your income tax return;
•
claim only deductions, rebates and credits to which your are entitled;
•
answer questions completely, accurately and honestly;
•
explain the full facts and circumstances when you seek tax advice or when you request a private
ruling.
Your obligation to be co-operative
We expect you to:
•
co-operate with tax administrators and treat them with courtesy, consideration and respect, as we do in
our dealings with you.
Your obligation to provide accurate information and documents on time
We expect you to:
•
file correct returns and documents within time limits specified;
•
provide complete and accurate information by certain dates;
•
take reasonable care in preparing your tax returns, documents and information;
•
inform us of relevant events such as incorporation, opening a business, correspondence address
changes, moving the place of business, ceasing business, with required taxpayer identifiers in a timely
manner so that we can administer tax legislation properly, efficiently and effectively.
Your obligation to keep records
We expect you to:
•
keep sufficient records and books to enable you to meet your tax obligations;
•
keep sufficient records and books for the required retention period;
•
take reasonable care in preparing your records and books;
•
allow us access to records and books so that we can check your tax obligations.
Your obligation to pay taxes on time
We expect you to:
•
pay the full amount of your taxes by the due dates;
•
pay the full amount of any balance outstanding resulting from assessment or reassessment;
•
help us develop a mutually acceptable payment arrangement if you cannot pay any outstanding
balance in full and have exhausted all reasonable possibilities of obtaining the necessary funds by
borrowing or re-arranging your financial affairs;
CONFIDENTIAL
11
•
withhold and remit by due dates all taxes withheld or collected on behalf of others;
•
advise us as soon as practical if some event beyond your control has affected your ability to pay your
taxes on time so that appropriate arrangements can be put into place to assist you.
Risks of non-compliance with the obligations
If you do not meet your tax obligations
•
the law may provide for penalties and / or interest to be imposed;
•
prosecution action may be taken in more serious cases.
1
Centre for Tax Policy and Administration
Tax guidance series
General Administrative Principles - GA
P002 Taxpayers’ Rights and Obligations
Taxpayers’ Rights and Obligations – Practice Note
Prepared by the OECD Committee of Fisc
al Affairs Forum on
Tax Administration
Caveat
Each revenue authority faces a varied environment within which they administer their taxation system.
Jurisdictions differ in respect of their policy and legislative environment and their administrative practices
and culture. As such, a standard approach to tax administration may be neither practical nor desirable in a
particular instance.
The documents forming the OECD Tax guidance series
need to be interpreted with this in mind. Care
should always be taken when considering a country’s practices to fully appreciate the complex factors that
have shaped a particular approach.
CONFIDENTIAL
2
Table of Contents
INTRODUC
TION ...................................................................................................................
....................... 3
THE BASIC
RIGHTS ...............................................................................................................
..................... 4
THE BASIC OB
LIGATIO
NS ..........................................................................................................
.............. 5
TAXPAYERS’
CHARTE
R .............................................................................................................
............... 6
GUIDANCE .......................................................................................................................
............................ 7
EXAMPLE TAXPAYE
RS' CHAR
TER.....................................................................................................
.... 8
HISTORY ........................................................................................................................
............................. 12
COMPATIBILITY ..................................................................................................................
..................... 12
CONTAC
T ........................................................................................................................
........................... 13
CONFIDENTIAL
3
INTRODUCTION
1. In any democratic society taxpayers citizens will have a number of basic rights as well as obligations in
relation to their Government and its agencies. Revenue authorities are no exception and most countries
have legislation governing taxpayer’s rights and obligations in relation to taxation.
2. As would be expected, given the diversity of environments faced by revenue authorities around the
world, the specific details of the rights and obligations vary somewhat by country. There are however a
number of common threads that can be identified. In 1990 the OECD’s Committee of Fiscal Affairs
Working Party Number 8 published a document entitled “
Taxpayers’ rights and obligations – A survey of
the legal situation in OECD countries
1
”
3. The survey found that, while most countries at that time did not have an explicit Taxpayers’ charter,
the following basic taxpayer rights were present in all systems:
•
The right to be informed, assisted and heard
•
The right of appeal
•
The right to pay no more than the correct amount of tax
•
The right to certainty
•
The right to privacy
•
The right to confidentiality and secrecy
4. These basic taxpayer rights also imply basic obligations. There is a set of behavioural norms expected
of taxpayers by Governments. These expected behaviours are so fundamental to the successful operation of
taxation systems that they are legal requirements in many, if not most, countries. Without this balance of
taxpayers’ rights
and
obligations taxation systems could not function effectively and efficiently. These
taxpayer obligations are:
•
The obligation to be honest
•
The obligation to be co-operative
•
The obligation to provide accurate information and documents on time
•
The obligation to keep records
•
The obligation to pay taxes on time
5. Many countries have elaborated these basic rights and obligations into a taxpayers’ charter. These
documents often include statements about behaviours expected from officials and taxpayers. Some
countries have chosen to consolidate the measures taken to protect taxpayers into a “taxpayers’ charter” or
“declaration”. In some countries they have taken form of a general statement of the broad principles which
1
Approved by OECD Council on 27 April 1990. Based on country replies to a questionnaire sent out in 1988.
CONFIDENTIAL
4
should govern the relationship between the tax authorities and the taxpayer. In other countries, these
documents provide a more detailed guide to the rights of taxpayers at each stage in the assessment process.
Yet other countries have taken the approach of including statements about behaviours expected from
officials and taxpayers in documents such as mission statements for the tax administration. Accordingly, it
should be stressed that even countries without a taxpayer charter may, nevertheless, attach equal
importance to taxpayers’ rights and that in practice taxpayers in such countries have rights similar to those
found in formal taxpayers’ charter statements.
THE BASIC RIGHTS
6. The 1990 survey noted the following rights:
a)
The right to be informed, assisted and heard
(Paragraph 2.16
2
)
7. Taxpayers are entitled to have up-to-date information on the operation of the tax system and the way in
which their tax is assessed. They are also entitled to
be informed of their rights, including their rights of
appeal. All taxpayers can expect that the information
provided to them should reflect the complexity of the
tax situation, thereby enabling them to understand better their tax affairs. The authorities may use a variety
of means to fulfil this obligation: information pamphlets, taxpayers’ charters, the telephone oral statements,
video guides,
etc
.
b)
The right of appeal
(Paragraph 2.17)
8. The right of appeal against any decision of the tax authorities applies to all taxpayers, and to almost all
decisions made by the tax authorities, whether as regards the application of the law or of administrative
rulings, provided the taxpayer is directly concerned.
c)
The right to pay no more than the correct amount of tax
(Paragraph 2.20)
9. Taxpayers should pay no more tax than is required by the tax legislation, taking into account their
personal circumstances and income. Thus whilst it is acceptable to reduce tax liability by legitimate tax
planning, governments make a distinction between this form of tax planning and forms of tax minimisation
which clearly go against the intent of the legislator. Taxpayers are also entitled to a reasonable measure of
assistance from the tax authorities so that they receive all the reliefs and deductions to which they are
entitled.
d)
The right to certainty
(Paragraph 2.21)
10. Taxpayers also have a right to a high degree of certainty as to the tax consequences of their actions. Of
course, certainty is not always possible. For exam
ple, taxpayers may not always know in advance the
effect of rules that are dependent on the facts and circumstances in a particular case. Also, tax authorities
may not be obligated to provide the taxpayer with certainty in relation to the application of anti-abuse
provisions aimed at taxpayers seeking to circumvent the
intent of the legislation. However, it is clearly a
goal that taxpayers should be able to anticipate the consequences of their ordinary personal and business
affairs. Achieving this goal is often difficult because modern tax systems are complex and evolving.
2
References to the 1990 document.
CONFIDENTIAL
5
e)
The right to privacy
(Paragraph 2.25)
11. All taxpayers have the right to expect that the tax authorities will not intrude unnecessarily upon their
privacy. In practice, this is interpreted as avoiding unreasonable searches of their homes and requests for
information which is not relevant for determining the correct amount of tax due. In all countries very strict
rules apply to the entry into a person’s dwelling or business premises by a tax official in the course of a tax
investigation and on obtaining information from third pa
rties. In some countries visits to a taxpayer
require the consent of the taxpayer; in the majority of countries a signed warrant is generally required to
enter the home of a taxpayer who objects to a visit by the tax authority. Similarly, strict rules apply to
obtaining information from third parties on the affairs of a taxpayer.
f)
The right to confidentiality and secrecy
(Paragraph 2.26)
12. Another basic taxpayers’ right is that the informati
on available to the tax authorities on the affairs of a
taxpayer is confidential and will only be used for the purposes specified in tax legislation. Tax legislation
usually imposes very heavy penalties on tax officials who misuse confidential information and the
confidentiality rules that apply to tax authorities are
far stricter than those applying to other government
departments.
THE BASIC OBLIGATIONS
a)
The obligation to be honest
13. If most taxpayers did not pay most of their taxes most of the time, a tax system would be placed under
a severe compliance strain and governments would be unable to finance the expenditures voted for by their
citizens. Taxpayer honesty is therefore fundamental to the operation of any tax system and all systems have
investigatory powers with penalties and sanctions in place to cater for instances where a taxpayer is does
not comply. Accordingly taxpayers should always exercise reasonable care and diligence in attempting to
honestly comply with their tax obligations.
14. The exercise of penalties and sanctions by a revenue authority should take into account any evidence as
to the reasons for non-compliance. Errors can arise
due from honest mistakes - particularly with complex
tax requirements, from ignorance about tax obligations or, in some instances, from the taxpayer being
prevented from complying by some event outside their control, such as a natural disaster.
15. Factors influencing levels of taxpayer honesty should be taken into account in the design and
administration of a tax system. Perceptions about the fairness and equity of a tax system and a taxpayer’s
prior treatment by officials from the revenue authority can influence their future honesty.
b)
The obligation to be co-operative
16. Modern tax systems can only function effectively if there is a high degree of voluntary compliance,
keeping the need for enforcement activity to a minimum. Co-operative behaviour on the part of most
taxpayers allows the Government to run the taxation system at a relatively low cost and minimises
unnecessary intrusion into taxpayer affairs and those of third parties. Hence taxpayers are encouraged to
co-operate with relevant revenue authorities in
attempting to comply with their tax obligations.
CONFIDENTIAL
9
Your right of appeal
We will, in normal circumstances, strive to:
•
fully explain your rights of review, objection
and appeal if you are unsure of them or need
clarification;
•
review your case if you believe that we have misinterpreted the facts, applied the law incorrectly or
not handled your affairs properly;
•
ensure that the review is completed in a compre
hensive, professional and impartial manner by a
representative who has not been involved in the original decision;
•
determine your objection [within ... days]/[
as quickly as possible]
6
unless we require more
information to do so, or the issues are unusually complex;
•
give you reasons if your objection has been completely or partially disallowed;
•
request further information from you only where it is necessary to resolve the issues in dispute.
Your right to pay no more than the correct amount of tax
We will:
•
act with integrity and impartiality in all our dealings with you, so that you pay only the tax legally due
and that all credits, benefits, refunds and other entitlements are properly applied.
Your right to certainty
We will, in normal circumstances, strive to:
•
provide you with advice about the tax implications of your actions;
•
let you know [at least ... days] /[as soon as possible]
7
before the conduct of an interview or a request
for the production of documents;
•
advise you of the scope of an interview and our requirements;
•
arrange a suitable time and place for the interview and allow you time to prepare your records.
Your right to privacy
We will:
•
only make enquiries about you when required to check that you have complied with your tax
obligations;
•
only seek access to information relevant to our enquiries;
•
treat any information obtained, received or held by us as private.
Your right to confidentiality and secrecy
We will:
•
not use or divulge any personal or financial information about you unless you have authorized us in
writing to do so or in situations where permitted by law;
6
See footnote 3
7
See footnote 3
CONFIDENTIAL
10
•
only permit those employees within the administration who are authorized by law and require your
personal or financial information to administer our programs and legislation, to access your
information.
And your obligations
Your obligation to be honest
We expect you to:
•
provide complete and accurate information as and when required;
•
declare all your assessable income in your income tax return;
•
claim only deductions, rebates and credits to which your are entitled;
•
answer questions completely, accurately and honestly;
•
explain the full facts and circumstances when you seek tax advice or when you request a private
ruling.
Your obligation to be co-operative
We expect you to:
•
co-operate with tax administrators and treat them with courtesy, consideration and respect, as we do in
our dealings with you.
Your obligation to provide accurate information and documents on time
We expect you to:
•
file correct returns and documents within time limits specified;
•
provide complete and accurate information by certain dates;
•
take reasonable care in preparing your tax returns, documents and information;
•
inform us of relevant events such as incorporation, opening a business, correspondence address
changes, moving the place of business, ceasing business, with required taxpayer identifiers in a timely
manner so that we can administer tax legislation properly, efficiently and effectively.
Your obligation to keep records
We expect you to:
•
keep sufficient records and books to enable you to meet your tax obligations;
•
keep sufficient records and books for the required retention period;
•
take reasonable care in preparing your records and books;
•
allow us access to records and books so that we can check your tax obligations.
Your obligation to pay taxes on time
We expect you to:
•
pay the full amount of your taxes by the due dates;
•
pay the full amount of any balance outstanding resulting from assessment or reassessment;
•
help us develop a mutually acceptable payment arrangement if you cannot pay any outstanding
balance in full and have exhausted all reasonable possibilities of obtaining the necessary funds by
borrowing or re-arranging your financial affairs;
CONFIDENTIAL
11
•
withhold and remit by due dates all taxes withheld or collected on behalf of others;
•
advise us as soon as practical if some event beyond your control has affected your ability to pay your
taxes on time so that appropriate arrangements can be put into place to assist you.
Risks of non-compliance with the obligations
If you do not meet your tax obligations
•
the law may provide for penalties and / or interest to be imposed;
•
prosecution action may be taken in more serious cases.
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